Online cryptocurrency exchanges sell bitcoin and Ethereum. FTX and Binance are the world's largest cryptocurrency exchanges. An investment round in 2022 valued it at $32 billion. Wall Street investors, including Sequoia Capital, flocked to it. Multimillion-dollar contracts were also signed by sports leagues and franchises.
SBF is FTX's 30-year-old founder and CEO. He was the second-largest Democratic fundraiser this election cycle and a significant crypto lobbyist. Bankman-Fried was compared to J.P. Morgan for rescuing other exchanges before this week's upheaval. Bankman-Fried also owns cryptocurrency trader Alameda Research. Binance's CEO, Changpeng Zhao, is FTX's major adversary.
CoinDesk released a report last week citing a secret document that raised suspicions about FTX and Alameda Research's ties. Alameda's balance sheet was purportedly tied to an FTX-issued cryptocurrency called FTT, raising worries over whether Bankman-enterprises Fried's could survive a big decline in FTT's value. .
The collapse of FTX, the poster child for cryptocurrency reliability, has sparked concerns about an unregulated market, experts say. Reena Aggarwal, director of Georgetown University's Psaros Center for Financial Markets and Policy, said individual investors who trusted FTX and the crypto market may lose money.Aggarwal told The Post on Thursday that it shakes system faith.
Other incidents, such as a crash this year, caused market collapse fears. Yesha Yadav, a Vanderbilt law professor who monitors cryptocurrency and financial markets, called the latest situation "near to doomsday." Yadav told The Post that FTX's bankruptcy raises questions about the industry's trustworthiness and capacity to run itself.“
Bankman-Fried and FTX may suffer. The Financial Times stated that Bankman-Fried wanted $8 billion to save his company. Justice Department and federal officials are also investigating FTX, The Post reported. Sam Bankman-Fried resigns when FTX files for bankruptcy. Yadav said the biggest losers will be FTX's customers. Sequoia, which invested $210 million in FTX, lost money.
FTX suspended withdrawals this week when customers tried to withdraw funds, and some are worried they're lost. Many Celsius Network clients still can't access their accounts after the bank filed for bankruptcy in July. FTX may be able to recoup payments through bankruptcy if it has money to refund clients, says NYU law expert Barry Adler.